When the games were free while it was in beta I played GRID, uncharted 2 and a shooter can't remember which and all played fine, didn't really notice any lag, this was on PS4. Haven't tried it on Vita.
According to speedtest.net over 3 tests my ping was 8ms so fairly low and guess that helped during my test of PS Now. Steering input on GRID and general play of uncharted felt fine. I was more disappointed at how washed out it looked rather than the playability but maybe that's just from being spoilt with PS4 graphics for almost 2 years now thinking PS3 looked better than what it actually was... I dunno. If the price was more competitive I'd subscribe to it but I'm struggling to get through the games I've currently got let alone opening up all these PS3 games with PS Now.

Just for the sake of the post, my Internet speed average at 165 download, 15 upload and 8-10ms ping.

my ping is around 11ms, that's not the issue. the issue is because the game has to be processed through a server. which means, what you press first has to be acknowledged by the console then it has to go to a server, the server processes it, then it comes back to you. rather than what you press being acknowledged by the console and also being processed right there and brought back to you.

so you have two lag points here, 1) your internet has to take the data to the server, 2) server has to process the data. (EDIT: i should add that it has to bring it back to you as well because even though that lag is there locally, it's far less). there's no way it will ever outdo what is being done locally. i agree that it's not noticeable at first because i actually thought the game was local when i was playing it...then i realized the lag...so i looked more into it and realized it was being streamed.

the reason why it looks fuzzy is because they can't output at the high bitrate that the game would be at if it were running locally and probably never will. it'll come close maybe. it's just like you're watching a movie, netflix doesn't give you proper bitrate so even if you're watching 1080p movies on it, it's never going to look as good as your local blu-ray movie...that is if you notice details.

the bitrate is variable so you might see fluctuation in quality.

here's something interesting about input lag, a more technical explanation than mine:

PlayStation Now: what's the lag like?

Video quality is important but crucial to the experience is latency - effectively the time taken from inputting a joypad command to seeing it play out on-screen. Even playing locally, every game has its own level of input lag: usually in the region of 50-80ms for a 60fps game and anything from 80-150ms for a 30fps title. On top of that there's display latency too. This can vary immensely depending on the screen.The challenge with cloud gameplay is that further delays are added between button press and on-screen response. Joypad commands need to be beamed over to the server, where game processing takes place, followed by video encoding, transmission over the internet and client-side decoding. Our previous analysis with first-gen cloud systems OnLive and Gaikai put end-to-end latency between the 150-300ms mark, with Gaikai occasionally able to deliver an impressive 133ms response in Bulletstorm. That's a major achievement, on par with local latency on the Xbox 360 version of the same game. However, the experience on both systems was fairly inconsistent with varying levels of input lag that could compromise controller response.PlayStation Now is an improvement, but it is similar in that the quality of the experience is reliant on network conditions. Initially, trying out Dead or Alive 5 and Killzone 2 we were confronted with a noticeably amount of input lag that distracted us from playing both games. Killzone 2 came across as barely playable, with incredibly heavy controls that were slow to respond, while in Dead or Alive 5 we had to input button presses on the Dual Shock 4 about half a second before we saw the attack appearing on screen. However, that turned out to be a one-off experience, with PlayStation Now operating much more impressively in later sessions - although we should stress that we did everything to ensure best possible performance: we used an Ethernet cable to connect directly to the router (eliminating potential WiFi lag) and we used a 40mbps fibre-optic internet connection, way beyond the base requirements for running the service.Stress-testing latency, we initially opted to use Ultra Street Fighter 4 - a title that performed extremely well on Nvidia's GeForce Grid system, and a game we'll return to when we assess the upcoming Shield console. First impressions were mixed. We could play the game just fine, with no problems in executing dragon punches, fireballs or any other special move. However, carrying out those all-important combos seemed to come down to pot luck. Street Fighter titles operate with really tight timing, and whether it was down to the additional latency or the slight variances in response, PlayStation Now simply couldn't deliver. To get a handle on actual latency, we pointed a 120fps camera at an Asus gaming monitor, filming the amount of time taken between pressing a button on the Dual Shock 4, and the resulting action occurring on-screen. Using the PS3's XMB as a reference for input lag, we found that the Asus screen added on just one frame of latency in our 120fps captures, 8.3ms. Factoring out the display lag, Ultra Street Fighter 4 handed in a 150ms latency - about 80ms slower than the game running locally.